In the Money/Out the Money for Short Calls and Short Puts

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Need assistance re: ITM/OTM for Short Calls and Short Puts. Is it correct to say that if you’re shorting a call, ITM is simply market price is BELOW strike price and it’s OTM when market price is ABOVE strike price.

For short puts, it’s ITM when market price is ABOVE strike price and OTM when market price is BELOW strike price. Is that correct?

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Hi, intrinsic value is how much the option is worth based on the difference between the market price and the strike price:

  • Calls gain intrinsic value when the strike price is lower than the market price
  • Puts gain intrinsic value when the strike price is higher than the market price

It doesn’t matter whether the investor is long or short! Intrinsic value is associated with the option itself, and not the position of the investor.

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Ahh so it’s not from the position of the investor but more on the option contract itself. Got it!

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